With the holiday season just concluded, the challenge of managing merchandise returns is a reality for many retailers. According to the latest data from the National Retail Federation (NRF), merchandise returns are projected to reach an astounding $890 billion in 2024, accounting for approximately 16.9% of sales.
While this underscores the inevitability of returns, it also highlights the need for retailers to refine their digital strategies. Retailers need to continue to focus on enhancing the digital product discovery experience, especially as more and more channels arise for consumers to discover and purchase their products.
To begin to address the issue holistically, retailers must aim to ensure that the right products are being targeted to their customers and that products meet their expectations — before they even hit the checkout button. By leveraging emerging technologies and fine-tuning product presentations, retailers can reduce the need for returns, improve customer satisfaction and protect their bottom line.
The Technology Advantage: Improving Pre-Purchase Experiences
1. Leveraging generative AI for smarter, focused product reviews.
One of the leading reasons for product returns is unmet expectations; either improper fit, unexpected size (big or small), mismatched quantity, color or material, etc. Retailers can combat this by providing customers with focused insights during the decision-making process. Generative AI can analyze and summarize large volumes of product reviews, offering customers a clear, concise view of critical details such as fit, quality, colors and functionality.
For example, rather than sifting through hundreds of reviews, a shopper can quickly understand whether a pair of jeans runs large or if the quality and color of a coat matches the product description. AI-powered insights can make customers feel more confident in their purchases, reducing the likelihood of post-purchase disappointment.
2. Offering AR/VR experiences to bridge the gap.
Augmented Reality (AR) and Virtual Reality (VR) technologies are revolutionizing online shopping by enabling customers to interact with products in ways previously reserved for in-store experiences. From virtually “trying on” cosmetics to visualizing furniture in their living spaces, AR/VR helps ensure that the product aligns with customer expectations and how they plan to use the product.
A Statista study revealed that 35% of shoppers aged 18 to 34 already utilize AR/VR features to purchase furniture, signaling a growing appetite for immersive shopping experiences. Providers like Threekit are paving the way with virtual showrooms, which allow customers to make better-informed decisions before buying, ultimately decreasing return rates. This can be particularly impactful for furniture retailers as large cargo and returns can be extremely costly.
3. Optimizing product descriptions across channels.
Omnichannel retail, social shopping and the rise of marketplaces is enabling brands to be discovered across more channels, but this is met with a need to ensure that product descriptions are clear, consistent and optimized across each digital channel. Due to limited resources and the bespoke needs of each digital channel, many retailers struggle to maintain consistency when listing products on third-party marketplaces or social commerce channels.
Feedonomics, a BigCommerce company, specializes in AI-driven product categorization and optimization, helping brands syndicate high-quality descriptions across more than 150 leading marketplaces. Accurate and detailed descriptions reduce the chances of customers purchasing items that don’t meet their needs or expectations, helping to curtail returns.
A More Personalized Approach: AI-Driven Personalization
Personalized product recommendations based on customer behavior and preferences also can reduce returns. By showcasing items that align closely with a shopper’s history or browsing patterns, retailers increase the likelihood of a satisfying purchase. Curated collections and interactive product displays take this a step further, allowing customers to visualize how multiple products may be styled together or how items will function in real life.
As noted by industry leaders, such technologies not only elevate the shopping experience but also instill confidence in buyers, making it more likely that the items they choose will stay in their hands rather than return to the retailer.
Beyond Technology: Practical Steps to Curb Returns
In addition to embracing cutting-edge technology, retailers should refine their return policies and pricing strategies to encourage thoughtful purchasing. For instance, incentivizing in-store returns over mail-in returns can reduce costs while also providing an opportunity for retailers to engage with customers face to face. Clear communication about return fees or restocking charges also may deter impulse buys that are more likely to be returned.
Looking Ahead: Preventing Returns to Protect Margins
As holiday sales surge, so too will the potential for returns. However, retailers don’t have to accept this reality as inevitable. By improving the shopping experience on the front end — whether through generative AI, AR/VR technologies or optimized product syndication — they can drastically reduce the volume of returns, preserve their margins and enhance customer loyalty.
This post-holiday season, the retailers who win will be those that focus not just on selling products but on ensuring that customers feel confident in their purchases from the start. By investing in innovative tools and thoughtful strategies, businesses can turn the tide on the staggering return rates projected for 2024, creating a more sustainable and satisfying shopping experience for all.
Al Williams is GM and VP, B2C, at BigCommerce. She is a seasoned ecommerce executive with over a decade of experience driving growth in the B2C space, supporting both leading brands and SaaS platforms. A recognized industry veteran, she has partnered with hundreds of brands and retailers across diverse verticals, delivering complex digital architectures and impactful site experiences that accelerate business performance and growth. Williams specializes in crafting and executing go-to-market strategies that optimize customer engagement and drive sustainable growth, leveraging her deep expertise to align technology solutions with strategic business objectives.